v3.26.3
FINANCING ACTIVITIES
 9 Months Ended
Sep. 30, 2026
Debt Disclosure [Abstract]  
FINANCING ACTIVITIES FINANCING ACTIVITIES
The disclosures in this note apply to all Registrants, unless indicated otherwise.

Common Stock (Applies to AEP)

ATM Program

In November 2025, AEP filed a prospectus supplement under which it may sell up to $3.5 billion of its common stock through an ATM program. In first quarter 2026, two million shares of common stock were issued for $264 million in net proceeds. In addition to these issuances and sales of shares of common stock, AEP also may use the ATM program to enter into forward sale agreements. See below for information regarding shares issued or expected to be issued under forward sale agreements.

Forward Equity Agreements

AEP has entered into the following forward sales under its ATM program and its March 2025 and May 2026 forward sale of equity agreements as follows:
Final MaturityCommon Shares into Forward (Number of Shares)Settled (Number of Shares) (a)Net Proceeds from Settlement (a)Common Shares Remaining in Forward (Number of Shares)Expected Proceeds (b)
(shares and dollars in millions)
March 2025 Forward SaleDecember 202623 5 $500 18 $1,729 
ATM Forward (c)December 2026/July 20286 — — 6 684 
May 2026 Forward SaleMay 202824 — — 24 2,945 

(a)The five million shares were settled in 2025.
(b)Actual cash proceeds will be impacted by the timing of settlement. Forward prices are based on the public offering price (net of underwriting fees), increased for the overnight bank funding rate, less a spread and less expected dividends on AEP’s common stock during the period the agreements are outstanding.
(c)Includes three million shares with a final maturity in December 2026 and expected proceeds of $374 million and three million shares with a final maturity in July 2028 and expected proceeds of $310 million.

Long-term Debt Outstanding (Applies to AEP)

The following table details long-term debt outstanding, net of issuance costs and premiums or discounts:
Type of DebtSeptember 30, 2026December 31, 2025
(in millions)
Senior Unsecured Notes$41,626 $37,190 
Pollution Control Bonds1,637 1,637 
Notes Payable574 683 
Securitization Bonds2,262 984 
Spent Nuclear Fuel Obligation (a)339 330 
Junior Subordinated Notes4,683 4,681 
Other Long-term Debt1,420 1,817 
Total Long-term Debt Outstanding52,541 47,322 
Long-term Debt Due Within One Year2,677 3,194 
Long-term Debt$49,864 $44,128 

(a)Pursuant to the Nuclear Waste Policy Act of 1982, I&M, a nuclear licensee, has an obligation to the United States Department of Energy for SNF disposal. The obligation includes a one-time fee for nuclear fuel consumed prior to April 7, 1983. Trust fund assets related to this obligation were $393 million and $381 million as of September 30, 2026 and December 31, 2025, respectively, and are included in Spent Nuclear Fuel and Decommissioning Trusts on the balance sheets.
Long-term Debt Activity

Long-term debt and other securities issued, retired and principal payments made during the first nine months of 2026 are shown in the following tables:
PrincipalInterest
CompanyType of DebtAmount (a)RateDue Date
Issuances:(in millions)(%)
AEPPollution Control Bonds$50 3.502030
AEP TexasSenior Unsecured Notes750 5.202036
AEPTCoOther Long-term Debt214 Variable2028
AEPTCoSenior Unsecured Notes650 5.252036
APCoSecuritization Bonds450 4.962035
APCoSecuritization Bonds326 5.372040
APCoSecuritization Bonds600 5.842046
I&MSenior Unsecured Notes650 5.602056
PSOSenior Unsecured Notes450 5.402034
PSOSenior Unsecured Notes550 6.302056
SWEPCoSenior Unsecured Notes300 5.302033
SWEPCoSenior Unsecured Notes600 5.202036
SWEPCoSenior Unsecured Notes750 6.002037
SWEPCoSenior Unsecured Notes500 5.902056
Non-Registrant:
KPCoOther Long-term Debt150 Variable2028
KPCoPollution Control Bonds65 3.752030
Transource EnergyOther Long-term Debt37 Variable2028
Total Issuances$7,092 

(a)Amounts indicated on the statements of cash flows are net of issuance costs and premium or discount and will not agree with the issuance amounts.
PrincipalInterest
CompanyType of DebtAmount Paid (a)RateDue Date
Retirements and Principal Payments:
(in millions)(%)
AEPPollution Control Bonds$50 3.202026
AEP TexasSecuritization Bonds25 2.292029
AEP TexasSenior Unsecured Notes50 3.812026
AEPTCoOther Long-term Debt623 Variable2028
APCoOther Long-term Debt175 Variable2026
APCoOther Long-term Debt1 13.722026
APCoSecuritization Bonds30 3.772028
I&MNotes Payable3 3.442026
I&MNotes Payable3 5.932027
I&MNotes Payable16 6.012028
I&MNotes Payable13 6.412028
I&MNotes Payable29 4.892029
I&MNotes Payable30 Variable2030
PSOSenior Unsecured Notes50 3.052026
SWEPCoSecuritization Bonds17 4.882039
SWEPCoSenior Unsecured Notes500 1.652026
Non-Registrant:
KPCoPollution Control Bonds65 4.702026
KPCoSecuritization Bonds16 5.302045
KPCoSenior Unsecured Notes120 4.182026
Transource EnergySenior Unsecured Notes3 2.752050
WPCoNotes Payable15 6.892034
Total Retirements and Principal Payments
$1,834 

(a)In March 2026, SWEPCo retired $1 billion of 4.24% Affiliated Notes Payable due in 2028.

Financing Activities Subsequent Events

In October 2026, AEP made capital contributions of $450 million and $210 million to AEP Texas and OPCo, respectively.

In October 2026, AEPTCo issued $270 million of variable rate Other Long-term Debt due in 2028.

In October 2026, I&M issued $110 million of 5.51% Notes Payable due in 2031.

In October 2026, I&M retired $7 million of Notes Payable related to DCC Fuel.

Debt Covenants (Applies to AEP and AEPTCo)

Covenants in AEPTCo’s note purchase agreements and indenture limit the amount of contractually-defined priority debt (which includes a further sub-limit of $50 million of secured debt) to 10% of consolidated tangible net assets. AEPTCo’s contractually-defined priority debt was 1.4% of consolidated tangible net assets as of September 30, 2026. The method for calculating the consolidated tangible net assets is contractually-defined in the note purchase agreements.

Dividend Restrictions

Subsidiary Restrictions

Parent depends on its subsidiaries to pay dividends to shareholders. AEP subsidiaries pay dividends to Parent provided funds are legally available. Various financing arrangements and regulatory requirements may impose certain restrictions on the ability of the subsidiaries to transfer funds to Parent in the form of dividends.
All of the dividends declared by AEP’s utility subsidiaries that provide transmission or local distribution services are subject to a Federal Power Act requirement that prohibits the payment of dividends out of capital accounts in certain circumstances; payment of dividends is generally allowed out of retained earnings. The Federal Power Act also creates a reserve on earnings attributable to hydroelectric generation plants. Because of their ownership of such plants, this reserve applies to APCo and I&M.

Certain AEP subsidiaries have credit agreements that contain covenants that limit their debt to capitalization ratio to 67.5%. The method for calculating outstanding debt and capitalization is contractually-defined in the credit agreements.

The Federal Power Act restriction does not limit the ability of the AEP subsidiaries to pay dividends out of retained earnings.

Parent Restrictions (Applies to AEP)

The holders of AEP’s common stock are entitled to receive the dividends declared by the Board of Directors provided funds are legally available for such dividends. Parent’s income primarily derives from common stock equity in the earnings of its utility subsidiaries.

Pursuant to the leverage restrictions in credit agreements, AEP must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%. The method for calculating outstanding debt and capitalization is contractually-defined in the credit agreements.

Corporate Borrowing Program (Applies to all Registrant Subsidiaries)

AEP subsidiaries use a corporate borrowing program to meet their short-term borrowing needs. The corporate borrowing program includes a Utility Money Pool, which funds AEP’s utility subsidiaries; a Nonutility Money Pool, which funds certain AEP nonutility subsidiaries; and direct borrowing from AEP. The AEP Utility Money Pool operates in accordance with the terms and conditions of its agreement filed with the FERC. The amounts of outstanding loans to (borrowings from) the Utility Money Pool as of September 30, 2026 and December 31, 2025 are included in Advances to Affiliates and Advances from Affiliates, respectively, on the Registrant Subsidiaries’ balance sheets. The Utility Money Pool participants’ money pool activity and corresponding authorized borrowing limits for the nine months ended September 30, 2026 are described in the following table:
MaximumAverageNet Loans to
BorrowingsMaximumBorrowingsAverage(Borrowings from)Authorized
from theLoans to thefrom theLoans to thethe Utility MoneyShort-term
UtilityUtilityUtilityUtilityPool as ofBorrowing
CompanyMoney PoolMoney PoolMoney PoolMoney PoolSeptember 30, 2026Limit
(in millions)
AEP Texas$624 $540 $313 $295 $382 $750 
AEPTCo474 342 137 56 (196)1,070 (a)
APCo594 648 154 21 45 950 
I&M283 855 180 147 (284)750 
OPCo328 71 113 23 (240)750 
PSO508 818 354 332 70 950 
SWEPCo375 1,308 258 192 494 950 

(a)    Amount represents the combined authorized short-term borrowing limit the State Transcos have from FERC or state regulatory commissions.
The activity in the above table does not include short-term lending activity of certain AEP nonutility subsidiaries. AEP Texas’ wholly-owned subsidiary, AEP Texas North Generation Company, LLC participates in the Nonutility Money Pool. The amounts of outstanding loans to the Nonutility Money Pool as of September 30, 2026 and December 31, 2025 are included in Advances to Affiliates on AEP Texas’ balance sheets. The Nonutility Money Pool participants’ activity for the nine months ended September 30, 2026 is described in the following table:
Maximum LoansAverage LoansLoans to the Nonutility
to the Nonutilityto the NonutilityMoney Pool as of
CompanyMoney PoolMoney PoolSeptember 30, 2026
(in millions)
AEP Texas$7 $7 $7 

AEP has a direct financing relationship with AEPTCo to meet its short-term borrowing needs. The amounts of outstanding loans to (borrowings from) AEP as of September 30, 2026 and December 31, 2025 are included in Advances to Affiliates and Advances from Affiliates, respectively, on AEPTCo’s balance sheets. AEPTCo’s direct financing activities with AEP and corresponding authorized borrowing limit for the nine months ended September 30, 2026 are described in the following table:
BorrowingsAuthorized
MaximumMaximumAverageAveragefrom AEPLoans toShort-term
BorrowingsLoansBorrowingsLoansas of AEP as ofBorrowing
Companyfrom AEPto AEPfrom AEPto AEPSeptember 30,September 30,Limit (a)
(in millions)
AEPTCo Parent$133 $578 $131 $194 $— $112 $— 
Midwest Transmission Holdings— 10 — — — 10 — 
SWTCo2 — 2 — 2 — 50 

(a)    Amount represents the authorized short-term borrowing limit from FERC or state regulatory agencies not otherwise included in the utility money pool above.

The maximum and minimum interest rates for funds either borrowed from or loaned to the Utility Money Pool are summarized in the following table:
Nine Months Ended September 30,
20262025
Maximum Interest Rate4.26 %4.83 %
Minimum Interest Rate2.57 %4.00 %

The average interest rates for funds borrowed from and loaned to the Utility Money Pool are summarized in the following table:
Average Interest Rate for FundsAverage Interest Rate for Funds
Borrowed from the Utility Money PoolLoaned to the Utility Money Pool
for Nine Months Ended September 30,for Nine Months Ended September 30,
Company2026202520262025
AEP Texas3.94 %4.67 %3.98 %4.37 %
AEPTCo3.98 %4.65 %3.99 %4.62 %
APCo4.00 %4.67 %4.01 %4.58 %
I&M3.92 %4.69 %3.95 %4.50 %
OPCo4.01 %4.61 %3.99 %4.70 %
PSO4.02 %4.64 %3.76 %4.68 %
SWEPCo4.03 %4.69 %3.99 %4.55 %
Maximum, minimum and average interest rates for funds loaned to the Nonutility Money Pool are summarized in the following table:
Nine Months Ended September 30, 2026Nine Months Ended September 30, 2025
MaximumMinimumAverageMaximumMinimumAverage
Interest RateInterest RateInterest RateInterest RateInterest RateInterest Rate
for Fundsfor Fundsfor Fundsfor Fundsfor Fundsfor Funds
Loaned toLoaned toLoaned toLoaned toLoaned toLoaned to
the Nonutilitythe Nonutilitythe Nonutilitythe Nonutilitythe Nonutilitythe Nonutility
CompanyMoney PoolMoney PoolMoney PoolMoney PoolMoney PoolMoney Pool
AEP Texas4.22 %3.83 %4.01 %4.76 %4.27 %4.66 %
SWEPCo— %— %— %4.76 %4.62 %4.69 %

AEPTCo’s maximum, minimum and average interest rates for funds either borrowed from or loaned to AEP are summarized in the following table:

MaximumMinimumMaximumMinimumAverageAverage
Interest RateInterest RateInterest RateInterest RateInterest RateInterest Rate
Nine Monthsfor Fundsfor Fundsfor Fundsfor Fundsfor Fundsfor Funds
EndedBorrowedBorrowedLoanedLoanedBorrowedLoaned
September 30,from AEPfrom AEPto AEPto AEPfrom AEPto AEP
20264.22 %3.83 %4.22 %3.83 %3.99 %4.02 %
20254.76 %4.27 %4.76 %4.27 %4.64 %4.64 %

Short-term Debt (Applies to AEP and SWEPCo)

Outstanding short-term debt was as follows:
September 30, 2026December 31, 2025
OutstandingInterestOutstandingInterest
CompanyType of DebtAmountRate (a)AmountRate (a)
(dollars in millions)
AEPSecuritized Debt for Receivables (b)$900 4.03 %$900 4.00 %
AEPCommercial Paper975 4.21 %605 3.92 %
SWEPCoNotes Payable— — %3 6.30 %
Total Short-term Debt$1,875 $1,508 

(a)Weighted-average rate of all borrowings outstanding as of September 30, 2026 and December 31, 2025, respectively.
(b)Amount of securitized debt for receivables as accounted for under the “Transfers and Servicing” accounting guidance.

Credit Facilities

For a discussion of credit facilities, see “Letters of Credit” section of Note 5.

Securitized Accounts Receivables – AEP Credit (Applies to AEP)

AEP Credit has a receivables securitization agreement with bank conduits. Under the securitization agreement, AEP Credit receives financing from the bank conduits for the interest in the receivables AEP Credit acquires from affiliated utility subsidiaries. These securitized transactions allow AEP Credit to repay its outstanding debt obligations, continue to purchase the operating companies’ receivables and accelerate AEP Credit’s cash collections.

AEP Credit’s receivables securitization agreement provides a commitment of $900 million from bank conduits to purchase receivables and expires in September 2028. As of September 30, 2026, the affiliated utility subsidiaries were in compliance with all requirements under the agreement.
Accounts receivable information for AEP Credit was as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
(dollars in millions)
Effective Interest Rates on Securitization of Accounts Receivable
3.97 %4.52 %3.94 %4.56 %
Net Uncollectible Accounts Receivable Written-Off$14 $11 $30 $25 

September 30, 2026December 31, 2025
(in millions)
Accounts Receivable Retained Interest and Pledged as Collateral Less Uncollectible Accounts
$1,559 $1,230 
Short-term – Securitized Debt of Receivables900 900 
Delinquent Securitized Accounts Receivable 41 66 
Bad Debt Reserves Related to Securitization41 42 
Unbilled Receivables Related to Securitization338 368 

AEP Credit’s delinquent customer accounts receivable represent accounts greater than 30 days past due.

Securitized Accounts Receivables – AEP Credit (Applies to all Registrant Subsidiaries except AEP Texas and AEPTCo)

Under this sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit’s financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary’s receivables. APCo does not have regulatory authority to sell its West Virginia accounts receivable. The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries’ statements of income. The Registrant Subsidiaries manage and service their customer accounts receivable, which are sold to AEP Credit. AEP Credit securitizes the eligible receivables for the operating companies and retains the remainder.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreements were:
CompanySeptember 30, 2026December 31, 2025
(in millions)
APCo$210 $203 
I&M191 175 
OPCo600 501 
PSO281 140 
SWEPCo232 169 
The fees paid to AEP Credit for customer accounts receivable sold were:
Three Months Ended September 30,Nine Months Ended September 30,
Company2026202520262025
(in millions)
APCo$4 $4 $11 $11 
I&M4 4 12 11 
OPCo14 7 29 22 
PSO5 4 11 10 
SWEPCo4 4 11 12 
The proceeds on the sale of receivables to AEP Credit were:
Three Months Ended September 30,Nine Months Ended September 30,
Company2026202520262025
(in millions)
APCo$452 $495 $1,411 $1,530 
I&M723 683 2,068 1,813 
OPCo1,070 927 2,799 2,523 
PSO809 659 1,722 1,466 
SWEPCo644 550 1,539 1,434